Today's coordinated action by global central banks to increase liquidity has given the investors optimism which drove up the Dow 490 points today. I am reminded of the last two times the Fed pumped exorbitant amounts of money into the economy. We got the Internet and housing bubbles which were great while they lasted. Unfortunately, both came with significant crashes that led to economic recessions.

The central bank actions will create some short term relief and positive economic results. I expect that there will be a nice rally in the stock market. I may even put reinvest some fund back into stock, reversing the my withdrawal from the market in the past few months.

Unfortunately, while the move does address some interbank lending challenges, it doesn't deal the fundamental issues in Europe. To me, the central bank action only delays the inevitable. Greece will default, weak European banks will fail, and there will be another economic crisis. It's not a question of if, but a question of when the piper will get paid.

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial or policy advice. Please consult a professional advisor.

Welcome to the fifty-fifth edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building and did not include submissions that were off topic. For reading convenience, the posts are listed with a brief summary or comment by the submitter and organized into seven categories: Earning, Insuring and Protecting, Investing, Living Frugally, Retiring, Saving and Taxes.

Insuring and Protecting

Investing

Bob Shark presents How to become an Investor posted at How to Become..., saying, "This short guide will tell you how to become a moderately aggressive investor. I can't promise you'll like this style but at least you can try."

Investor Junkie presents Investment in Physical Gold? posted at Investor Junkie, saying, "Gold seems to be all the rage these days — especially physical gold. Whether you are investing in gold coins, or whether you are investing in gold account, receiving a record of numbered gold bars that belong to you, it’s important to understand the challenges that can come with investing in physical gold."

Dividends4Life presents 17 Stocks Building Wealth Through Higher Dividends posted at Dividend Growth Stocks, saying, "Some traditionalist would say your home is your greatest wealth building asset. I would argue it is not. Others would say your income is your greatest wealth building asset. Thought there is a lot of truth to the statement, it is still not your greatest wealth building asset. So, what is your greatest wealth building asset? Everyone is born with it."

Dividend Growth Investor presents Should you follow Buffett’s latest investments? posted at Dividend Growth Investor, saying, "Warren Buffett is one of the most successful investors of all time. Investors who closely followed Buffett’s moves in the Berkshire Hathaway (BRK.B) stock portfolio between 1976 and 2006 would have significantly outperformed the market. So should investors follow his latest moves?"

Retiring

misst presents Plan Your Retirement posted at Prairie Eco-Thrifter, saying, "Although retirement is a ways off for me yet, I do think about what it will look like quite often. I want to make sure I have a plan in place for when I cross this bridge so that I stay happy, content, and stimulated. If all goes according to plan my hubby and I will be traveling the world and volunteering where there is need and each of these trips will be photo documented since I love taking pictures."

Taxes

Jessica Bird presents How Much Tax Do You Pay On Gas? posted at CarTaxBands.org, saying, "Do you think you spend a lot on gas? You should compare people in the UK pay. This blog post looks at the cost of gas in the UK and why it is so expensive."

Gregory Stokes presents Changes To Tax Credits posted at Tax Credit Calculator, saying, "The rules around tax credits are changing in April 2012. This guide looks at how the change might affect you and your finances."

Sunday, November 27, 2011

One of my disappointments with getting older was the need to wear reading glasses. For reference, I don't need reading glasses normally. I only need reading glasses when wearing contacts or glasses. Without any vision correction, I can read fine since my close vision is excellent. In 2007, I had resigned myself to a life of wearing bifocal contacts or reading glasses with regular contacts. I chose reading glasses with regular contacts since that was the less expensive option.

Recently, my eye doctor suggested another option: use a contact in only one eye. Thus, the eye with the contact will have 20/20 distance vision and the uncorrected eye will have reading vision. I thought this was an idea worth trying. First, I had played sports without vision correction until my late twenties and thus, used only one eye for distance vision. Second, only using one contact will cost less and take less effort since I will only need a lens for one eye.

Today, I started the experiment with using one contact lens in the eye with the worse vision. The main adjustment I will have is getting used to my worse vision eye having the better distance vision. Perhaps, the adjustment will be easier since the worse vision eye is also my dominant eye. I'll try it for a week and see how it goes.
For more on New Beginnings, check back every Sunday for a new segment.

This is not financial or health advice. Please consult a professional advisor.

Although the read was a slow start, I found the book to be an interesting account of the hubris and greed of the top people in many of the financial institutions. Although the book title refers to "government mismanagement," I found the focus of the book to be mostly about the rise and subsequent fall of the top individuals in the private sector.

The protagonists, Jimmy Cayne, Dick Fuld, and Stanley O'Neill, were CEOs of major financial firms, Bear Stearns, Lehman Brothers, and Merrill Lynch, respectively. They reached the top by taking risks and making tremendous amounts of money. They were smart, aggressive and driven to large profits. Unbeknownst at the time, they were also lucky. Lucky to be in the right place at the right time.

Unfortunately, the luck didn't last. The same strategies that worked during the boom times failed miserably during the crash, bringing down these individuals, their companies, and nearly the world economy. Their downfall was believing until almost the very end that they were invincible and incapable of failure.

For more on Reflections and Musings, check back every Saturday for a new segment.

We've been using the College 529 Savings Plan to save for our daughter's education. While the investment returns have been hurt by the Great Recession, the total college savings is still about 5-10% above the principal we contributed. However, since our daughter is only seven, hopefully, there is time for accounts to recover by the time she enters college.

For more on Crossing Generations, check back every Thursday for a new segment.

This is not financial or saving advice. Please consult a professional advisor.

Wednesday, November 23, 2011

Want to save money? Consider cutting back on things that are nice to have but aren't necessities. Here are four things that we've put in the non-necessity category:

Newspaper or magazine subscriptions. We do not have a subscription to the local newspaper. We do not have any subscriptions to magazines. In most cases, I can read the articles I want on the Internet. I do have one subscription to The Wall Street Journal, which we pay for with airline miles. Otherwise, we wouldn't have any periodicals delivered to our home.

Cable or satellite TV. Why pay for something I can get for free? I am happy with broadcast TV, which I can get through our HD receiver adapter. Another option is Internet TV, but I haven't tried that yet. I don't miss the programs that I can only get on cable or satellite TV.

Gym membership. Before retiring, we never had a gym membership. We finally joined by taking advantage of a great deal my company had for retirees at the company gym: no initiation fee, no contracts and a monthly charge of $38 for two of us. However, after a couple years, we decided to drop the membership and save the money.

Cell phone contracts. I don't have a cell phone and my spouse uses a pre-paid Virgin mobile plan. I guess I am a technology Neanderthal. I prefer to be not connected when I'm away from the house and our phone.

Not buying the same four items may not work for everyone, but I'm pretty sure that most people have at least one item that is nice to have but not a necessity.

For more on The Practice of Personal Finance , check back every Wednesday for a new segment.

Welcome to the fifty-fourth edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building and did not include submissions that were off topic. For reading convenience, the posts are listed with a brief summary or comment by the submitter and organized into seven categories: Earning, Insuring and Protecting, Investing, Living Frugally, Retiring, Saving and Taxes.

Investor Junkie presents Could Your Business Handle Another Recession? posted at Investor Junkie, saying, "It doesn’t hurt to be ready for the next economic setback. It’s always a good idea to shore up your business finances, and be prepared for whatever might come your way. So, as you try to avoid falling into panic, here are some things to consider:"

Lazy Man and Money presents What Do You Want to Do With Your Life? posted at Lazy Man and Money, saying, "Recently, I've been bombarded with this question by several different sources. I'm not the type to believe in signs, but I'm starting to wonder if someone is trying to tell me something. Each time the question has come about in the context of what do you want your career to be?"

Dividend Growth Investor presents Four important dates for dividend investors posted at Dividend Growth Investor, saying, "The most exciting press release is the one that discusses how a dividend increase has been approved. Understanding the dates mentioned in those press releases is essential for investors, as it will determine the timing of the distribution."

misst presents How to Invest for the Long Term posted at Prairie Eco-Thrifter, saying, "There are several investing ratios that you can use to get you to the portfolio that you’d like. Some ratios are better than others if you are investing for the long term."

Jim Tolley (aka Kidgas) presents A Quest for Increasing Stock Dividends posted at Cash Flow Mantra, saying, "Over the next year, I would like to get the majority of my portfolio invested in stocks that pay dividends and increase my quarterly dividend income to $1000. Ultimately, the plan would be able to live off dividends while leaving the principal intact."

Dividends4Life presents 19 Stocks Avoiding A November Freeze With Increased Dividends posted at Dividend Growth Stocks, saying, "For a dividend investor, there is not much worse than a stock that cuts or eliminates its dividend. Suddenly, the reason you purchased the stock no longer exists. Many dividend investors, myself included, have a hard and fast rule to immediately sell any stock held as income investment if it cuts its dividend"

Jon Elder presents Index Funds, Yay or Nay? posted at Free Money Wisdom, saying, "An index fund will typically outperform most other types of stock investments, including the top actively managed funds. Only 20% of actively managed funds out-perform these top index funds."

Jonathan from Debt Loans presents Holiday Helps: How to Plan a Budget-Friendly Getaway posted at Frugal Living, saying, "Holidays can be very expensive, and sometimes people end up getting into debt by taking one they can’t really afford. Even if your holiday isn’t elaborate, you can plan for a nice time on a budget. Take time to prepare, try to stick to your budget, and you’ll have every chance of enjoying a great time without the guilt of having spent more than you should."

Jonathan from Debt Loans presents Keeping Warm on a Budget posted at Money Mum, saying, "If you live in a place where the weather gets chilly, you know that keeping warm can be a challenge if you’re trying to stick with a budget. There are plenty of easy, inexpensive ways to fend off the cold and save money, so consider some of these ideas the next time you need to warm up:"

Tim @ Faith and Finance presents 4 Money Myths – Tips Against Breaking the Bank posted at Faith and Finance, saying, "Before you start shopping around, spending your entire grocery budget on great bargains, or buying paint and wallpaper from the clearance aisle to ‘Do It Yourself’, discover why these 4 money myths should be debunked once and for all."

Jonathan from Debt Loans presents Saving on Energy Costs: Windows and Lighting posted at Wallet Watcher, saying, "Windows and lighting occupy an interesting place in energy costs and your home. The former can add value to your home as well as allow you to save, while the latter can be cost-effective and still provide decent savings. The rest is up to you, with regard to far you want to take each item in your home."

Saving

David Leeman presents The Importance of Saving Money posted at Financial Freedom Advantage, saying, "Why save money? Too many people are spending money today that they haven't even earned. Good personal money managers realize they need to save today's earnings for expenses they will have in the future."

Taxes

Emily Everet presents How Your Company Benefits Are Taxed posted at P11d, saying, "If you receive benefits or gifts from your company they will usually need to be taxed. This post outlines what you need to know and how much you will be taxed."

Mark Roberts presents Explaining the Standard Deduction posted at Tax Brackets, saying, "Your standard deduction reduces the amount of your income that is taxed. This blog post explains the standard deduction, how much it is and when you can't claim."

Mr. Money Smarts presents Looking For A Job? Don’t Forget The Tax Deductions! posted at Smart On Money, saying, "If you’ve spent some time and effort — and money — on your job search this year, you might be eligible for a few tax breaks. Indeed, many of the expenses that you are likely to incur during a job search are tax-deductible."

Monday, November 21, 2011

Currently, our investments are mostly in cash, except for my company stock and company stock options. I'm still waiting for a big market downturn, which I thought would happen in the summer of 2011 To me, the market is way underestimating the the downside risk. Let me count the issues:

Greece

Italy

Spain

Congressional Super Committee deadlock

Growing U.S. deficit, debt, and entitlements

9% unemployment and lack of hiring

Higher tax rates inevitable

Local government bankruptcies

Housing non-recovery

Bank exposure to sovereign debt crisis

Increasing student loan debt

Fed policy of low interest rates

Inflation inevitable

Continuing economic uncertainty

Lack of leadership by the political class

There are likely more out there, but these are the ones I can quickly list. I can see one, two or maybe up to five of these issues being resolved, but not the majority. Eventually, the reality of these issues, and other issues still to surface, will come back to haunt the market.

So for now, we will continue to stay on the sidelines waiting for the (inevitable) market decline to happen.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Friday, November 18, 2011

I worked all of my career at a Fortune 100 company, advancing to the top 5% of management before retiring at 49. After retiring, I decided to work for smaller companies which allowed me to avoid corporate bureaucracy and better leverage my experience and personal strengths.

However, two of the companies that employ me are starting to implement "big company" operations. They are systematizing the work and asking employees to follow proven processes. Objectively, I agree with what the companies are doing. Systematization is necessary for efficiency, effectiveness and accelerating business growth. But for me, the work is becoming less energizing and less fun. I just don't enjoy investing effort in company systems and processes.

For both these companies, I've significantly cut back on my work hours. One of the companies has tripled its part time staff. So it's easy for me to work less than a 10 hours a month. For the other company, the job is seasonal and only last four months. Still, I am only going to work 10-12 hours a week, and only schedule additional hours for returning customers.

The way both companies are evolving, I expect that they will continue their journey be becoming "big companies," which is the right business decision. So I probably won't be working at these companies in a couple years.

For more on Reaping the Rewards, check back every Friday for a new segment.

This is not financial, job or retirement advice. Please consult a professional advisor.

Thursday, November 17, 2011

Recently, I reviewed an 8th Grade Algebra I text book at for our local junior high school since I was asked to tutor the subject. My initial reaction was one of disappointment. While I understood the content, I didn't agree with the teaching strategy, which didn't focus enough on the mathematical concepts. After reading the additional chapters, I came to a shocking conclusion: the course was teaching students how to answer questions on the State High School Graduation test.

Now I understand better the experience I had with some of the students I tutored for College Entrance Exams. Students that were getting A's in school were struggling with SAT/ACT math questions. I think it's because they learned how to pass the High School Graduation Test instead of learning the key foundational math concepts.

For reference, I am not at all against preparing students for the High School Graduation test. I'm just against spending multiple years of course work specifically preparing for the test. If a student learns the foundational math concepts, preparing for the test should only take a couple months, at most. The High School Graduation test should be a confirmation that a student has achieved a certain level of education and not a confirmation that he has learned how to answer questions on a specific test.

For those teachers that argue schools must teach to the High School Graduation test to maintain funding, I offer an alternative. Fine, have the base (or perhaps remedial) math curriculum teach to pass the High School Graduation test. However, also offer a math course that is dedicated to providing a real math education. That way students will have an option of learning math in a way that provides a good foundation for a future engineering or science profession.

However, I don't expect our school system to pay much attention to what I think is needed. Luckily, I have a degree in engineering and can augment my daughter's math education when she reaches junior high school.

For more on Crossing Generations, check back on Thursday for a new segment. This is not financial or education advice. Please consult a professional advisor.

Wednesday, November 16, 2011

The recent earthquakes in Virginia and Oklahoma have caused me to give consideration to earthquake insurance. Our current homeowner's policy does not cover damage from earthquake. Since we live in a low probability, but not zero chance, earthquake zone, I have not seriously considered getting earthquake insurance. However, both Virginia and Oklahoma were also low probability zones, which has caused me to worry a little more. Here are my reasons for considering earthquake insurance:

Repairing earthquake damage would cause significant hardship. Since we are retired, it would be difficult for us to pay for significant damage to our home, e.g. over $100,000. We would not be able to borrow the money since we don't have a regular job and such an amount would significantly reduce our savings accounts.

Insurance cost is low. The annual premium would be 0.03% the value of our house which seems reasonable. Thus, the cost for 20 years would be only 0.6% the value of our house. For perspective, the additional earthquake premium is less that the insurance premium of 6 months of one car. However, it would increase our homeowners insurance by about 14%.

Taking earthquake insurance wouldn't fully protect us since the deductible is at least 5%. So there would always be some out of pocket cost for repairs. However, we would be protected from significant unplanned costs, which is what we can't in retirement.

I'll be doing a some more research on earthquake probability for our region befor making a decision to proceed with earthquake insurance.

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.This is not financial or insurance advice. Please consult a professional advisor.

Welcome to the fifty-third edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building and did not include submissions that were off topic. For reading convenience, the posts are listed with a brief summary or comment by the submitter and organized into seven categories: Earning, Insuring and Protecting, Investing, Living Frugally, Retiring, Saving and Taxes.

And now onto the Carnival:

Earning

Jim Tolley (aka Kidgas) presents Hondurans Know How to Hustle posted at Cash Flow Mantra, saying, "There is no real social safety net in Honduras so everyone must figure out some way to put food on the table. The entrepreneurial spirit is alive and well mainly out of this necessity."

Jim R. presents How to Find Where the Jobs Are for An Occupation posted at Free By 50, saying, "If you're job hunting or considering a new career then it is a good idea to know where jobs are located for the field in question. Today I'll show you how to find out how many jobs for a given occupation are in individual states and metropolitan regions."

Dividends4Life presents 15 Dividend Stocks With A 15% Yield In 15 Years posted at Dividend Growth Stocks, saying, "Who wouldn't like to earn a safe 15% on their original investment? Normally double-digit returns are the fodder of con artists or associated with extraordinarily risky investments. In either of these cases, the person is usually left holding despair in one hand and an empty wallet in the other. However, I have discovered that you can actually enjoy high yields with minimal risk..."

Jonathan from Debt Loans presents Common Mistakes New Investors Should Avoid posted at Frugal Living, saying, "Investing is an exciting and potentially profitable venture, but as with almost anything in life: where there is profiteering, there are scammers and mistakes. To help you avoid these costly errors, however, the following guide will help kick start your investing without making you spend a dime."

Living Frugally

Jonathan from Debt Loans presents Waste Not, Want Not ? Part Two posted at Money Mum, saying, "These easy to do tips and recipes should help to change the way you look at your leftovers. Where once you may have opened the fridge door and seen food to be disposed of, hopefully, you’ll now see opportunities for a fantastic frugal meal."

Jonathan from Debt Loans presents Saving on Energy Costs: Simple Ways to Save posted at Wallet Watcher, saying, "Overall, you should notice how some small items can make a difference in your energy costs. There is much more to learn about saving on energy – and its costs in your home."

Ramsay presents Financial stewardship is not a one person job posted at Wealth Management, saying, "It’s troubling to see so many families these days in which only one person is involved in the day-to-day financial decisions. Additionally, many families have one individual responsible for all the family finances."

Chelsea Prescotti presents How To improve Your Credit Score posted at CreditScore.net, saying, "Saying that your credit score plays a vital role in whether you can apply to acquire further credit, obtain reasonably priced car insurance, or take out a small business loan for example is a bit of an understatement. It plays an enormous role and it is something that shouldn’t be taken lightly. In short, a credit score helps lenders and credit card and insurance companies, for example, determine the risks involved in lending a borrower/applicant money, credit, or insurance respectively. It also helps lenders and other agencies determine the specific amounts, rates, and terms and conditions to offer a borrower/applicant."

Retiring

Lazy Man and Money presents Determining Your Retirement Expenses posted at Lazy Man and Money, saying, "My expenses in retirement won't be the same as they now. With that in mind, I thought it was worth taking out a crystal ball and attempting to predict how some of the costs may change in 30 years."

Mr. Money Smarts presents Reduce Your Debt And Save For Retirement posted at Smart On Money, saying, "The best solution for someone struggling with debt and trying to save for retirement is finding a happy medium between the two. Although decreasing your take-home pay may not be an ideal situation while paying off your debt, you will regret not at least taking advantage of your company match"

Monday, November 14, 2011

Here is our Q3 2011 Wealth Builder Ratios update. During the third quarter of 2011, the Dow, Nasdaq and S&P500 indices were down at -12.1%, -12.9% and -14.3% respectively. Our investment portfolio returns declined from -1.7% to -3.0% due to the overall market decline and my company stock having a -1.4% return during Q3.

2011 has started out poorly due to a slight negative return for my company stock. As my company stock (hopefully) advances, we plan to continue selling shares and increasing diversification, primarily in large cap dividend paying stocks.

Savings to Salary
Target>20
2007=23 2008=16.7 2009=15.3
2010=16.6

16.3

16.1

Although it feels like our retirement savings have stabilized, I think the second half of 2011 may be weak. I sold most of our stock investments in June 2011, but still have my company stock and stock options. The change mainly reflects the change in my company stock.

(For reference, Salary refers to gross salary just prior to early retirement in October, 2007.)

Both #1 and #2 were directlycorrelated with how well our stock, bond, and CD investments returns. With the poor performance of my company stock and the high proportion of cash, our portfolio declined less than the indices in Q3.

It has been very challenging retiring at the beginning of a bear market. Our short term expenses (next 3-5 years) are invested in CDs, bonds and money markets. So we can wait for the stock market to continue an upward trend, hopefully through 2012. I continue to be concerned about volatility of our investment portfolio, but believe there is more upside than downside potential going forward.

I continue to have the same financial goals for 2011. At this point, I am pessimistic about the economy and the stock market.

For more on Strategies and Plans, check back every Monday for a new segment.

Sunday, November 13, 2011

Prior to the Great Recession, I never saw Prime steaks in a regular grocery store. As background, the top grade of Prime (of 2.9% of the beef sold) was sold only to restaurants and hotels. The typical quality of steaks sold in grocery stores was Choice or Select.

According to The Wall Street Journal, Prime beef has been available at Costco since the summer of 2009. (Unfortunately, as with most Costco purchases, the steaks are sold in quantities than we would have for one meal.) However, I didn't get around to buying prime steaks for over a year. In the summer of 2011, I started buying Prime steaks periodically in our regular grocery store.

I don't expect the wide availability of Prime steaks to continue once the economy fully recovers. So, in the near term, I will continue make purchases of Prime beef for grilling to get restaurant top quality steaks for our everyday meals.

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial or culinary advice. Please consult a professional advisor.

Saturday, November 12, 2011

I am tired of poor or dangerous actions caused by people driving while texting (DWT), Last week, a driver would not let my spouse pull into his lane. When he passed us, his was clearly looking down a at cell phone screen. He wasn't looking at the road. He may have even been typing in a text message.

I wonder how may accidents have been caused by texting or reading a message. To me, driving while texting should be as serious an offense as driving under the influence of alcohol.

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial. policy or driving advice. Please consult a professional advisor.

Friday, November 11, 2011

Doing a temporary full time job for the past nine months helped me realize that I've been experiencing a transition to retirement since October 2007. I didn't realize the transition was until I went back to work. However, now that the temporary full job is nearly over, I am better able to articulate the changes.

Growing savings to spending savings. Most of my adult life, I've been paying myself first and living below my means. While I was working, our savings and retirement accounts have received regular contributions over time. As are result, the accounts have typically grown annually with the exception of a few "crash" years. Despite the significant market declines, our accounts still have achieve our targets.

Since my retirement in October 2007, we've been living primarily off our savings. Since I retired at 49, I've been concerned about the impact of the Great Recession on our savings and retirement accounts. I became concerned about depleting our accounts and consciously took part time jobs to reduce the withdrawal rates. From 2008 to 2011, I worked enough to cover 6%, 15%, 43% and 86% of our annual expenses. If I had continued working, I could have covered 116% of our annual expenses.

However, over the past few months, I came to realize that a part of retirement is spending down savings. It was time to get over it and get used to a declining savings and retirements accounts. Of course, I wistfully long for the old days of a booming economy and stock market. But I'm definitely not holding my breath.

Working a career to working a job. During the most successful part of my working time, I bought into the idea of work being a career. I probably was officially working 60-80 hours week at the office and then thinking about work during my personal time. I benefited from treating work as a career. I was compensated well, saved a lot of money, and was able to retire in my forties.

In retirement, I think of work as being a job to earn some money. I still strive to do my work with excellence, but I no longer am trying to exceed expectations, nor trying to advance in the company. Also, I don't worry about performance appraisals or doing professional development. If I tire of the work, the management or my colleagues, I can quit the job and get another one that I consider more fun.

Moving from the outer circle to the inner circle. While I was working, I was spending most of my time with people in my outer circle as result of working 60-80 hours a week. Because it was work, I was required collaborate and work effectively with people in my outer circle. As a result, I was spending lots of quality time with people in the outer circle and investing a lot of energy to coach and develop those in the outer circle.

Since retiring, I'm moving focusing on my inner circle of family and friends. I am working to give my inner circle priority for my quality time, energy and personal development, which the outer circle seemed to mostly get in my working years. In addition, other than to comply with social norms, I plan to spend no effort developing relationships with people in the outer circle.

So that's my epiphany from unretiring and taking a temporary full time job. However, I look forward to returning to my retirement transition since the temporary full time job will be ending soon.

For more on Reaping the Rewards, check back every Friday for a new segment.

This is not financial, career or retirement advice. Please consult a professional advisor.

Wednesday, November 09, 2011

"A good idea is about ten percent and implementation and hard work, and luck is 90 percent." ~ Guy Kawasaki

Doing anything well usually requires hard work. That's also true for using good personal finance techniques.

Here are some good strategies for building wealth, but take hard work to do:

Pay yourself first. Most people pay their bills first and spend what's left over. This strategy requires putting money in savings first and then spending the rest. To me, this is an important element of building wealth. Yet, many people won't or can't take this step.

Start saving early. The younger one starts the easier it is to build a bigger savings account. For example, saving $1/day for 30 years at 6% interest is worth $30,713. Saving $1/day for 50 years at 6% interest is worth $116,074. At 10% interest, the value is $69,632 and $537,687 for 30 and 50 years, respectively.

Live below one's means. Living on 90 or 80% of one's salary helps builds savings and also helps reduce the impact of an economic downturn. In addition, it helps make the transition to retirement easier.

While I believe this are great strategies for building wealth, I don't seem many people doing them. I guess if these were easy to do, we'd all be wealthy:-)

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

Welcome to the fifty-second edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building and did not include submissions that were off topic. For reading convenience, the posts are listed with a brief summary or comment by the submitter and organized them into seven categories: Earning, Insuring and Protecting, Investing, Living Frugally, Retiring, Saving and Taxes.

Carlos Sera presents A Preservation Tale posted at Financial Tales, saying, "This tale is specifically written for those that are looking for ways to deal with periods of high inflation with a secondary consideration for dealing with high inflation and receiving periodic income from your portfolio. It is why I call it A Preservation Tale, because the objective during periods of high inflation is to preserve purchasing power."

Jim Tolley (aka Kidgas) presents Investing in the Dogs of the Dow posted at Cash Flow Mantra, saying, "There is an investing technique that attempts to take advantage of the highest yielding dividend stocks in the Dow as a means of buying low and selling high. It was popular in the 1990″s but I hadn’t heard much about it recently although in the current environment, I am wondering if it is worth a look."

Dividends4Life presents 18 Dividend Stocks With A Good Yield And Growth Balance posted at Dividend Growth Stocks, saying, "Growth or yield? In a perfect world, income investors would want both from their investments and are not interested in investments that offer neither. This is where the common ground ends, and the debate begins. Without the benefit of a perfect world, we are left with the middle ground which is a balancing act between growth and yield."

Investor Junkie presents Are Those Long Term Capital Gains, or Short Term Gains? posted at Investor Junkie, saying, "How long you have been holding an investment matters. If you haven’t held it long enough, you could end up paying more in capital gains taxes. As you prepare your portfolio for the end of the year, don’t forget to consider the length of time you have had a stock."

Jim R. presents What You Should Know about Financial Gurus posted at Free By 50, saying, "More often than not financial gurus are just voicing their own opinion and in the worst case they may be biased and trying to pitch a product they themselves have a vested interest in selling."

Living Frugally

Jon Elder presents Controlling Expenses From the Top Down posted at Free Money Wisdom, saying, "If we’re serious about controlling our finances—and I mean really serious–nothing will have greater impact than lowering expenses from the top down, meaning the Big Stuff. I’m talking about four expenses in particular—housing, cars, health insurance and entertainment."

John presents iPhone 4S: Verizon, AT&T or Sprint? posted at Wallet Blog, saying, "With the new iPhone 4S having just hit stores, many of you have a tough choice to make in terms of which network to get it on. So, how are you supposed to decide?"

Retiring

MoneyCone presents HOWTO Do A 401K Rollover Correctly posted at Money Cone, saying, "When you leave behind your old job for a better opportunity, in your excitement, don’t forget your 401K! Consolidation will make your life a lot easier."

Peter presents 2012 Roth IRA Rule Changes posted at Bible Money Matters, saying, "What are the 2012 Roth IRA rule changes? It’s important to pay attention to any upcoming changes in the rules, because modifications in the maximum contribution limits, annual income limits, or other factors can throw a wrench right in the middle of your retirement plans"

Taxes

Gemma Flannery presents Your Tax Code For 2011 posted at Tax Codes, saying, "Your tax code is used by your employer to calculate the amount of tax to deduct. Each year this changes with as tax brackets change. This posts explains the tax code for 2011."

Monday, November 07, 2011

During my working days, I read about how companies such as Ford and McDonald's became great. I noticed there was a pattern to how these companies became extremely successful. Here is my summary:

Start with a great product. Great means that it has broad appeal to consumers: right product and right price.

Systematize production. Develop a process or system that enables repeatability of production or service. Thus, consumers get the same great product or service every time.

Make the process scalable. Enable the fast growth of the business through fast sales growth.

Expand. This is the toughest and the most intensive part. This involves doing the work to build the capability for fast growth: facilities, employees, knowledge transfer and finances.

Many startups do well with great products. To me, many busoness failures happen at the second and third steps which then prevents or leads to a poor expansion. Both Ford and McDonald's were able to make it through all four steps and become tremendous business successes.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial or business advice. Please consult a professional advisor.

Sunday, November 06, 2011

"Insanity is doing the same thing over and over again but expecting different results." ~ misattributed Rita Mae Brown and Albert Einstein

As I get ready for the 2011 and 2012 elections, I find myself asking the question that Ronald Reagan asked, "Are you better off than you were four years ago?" It's a simple question. If I am better off, I will vote for the incumbent. If I am worse off, I will vote for change.

For the Tuesday, November 8, 2011, I will be voting for change. With the way things are going, I expect to be voting for change in 2012 also.

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial or voting advice. Please consult a professional advisor.

Friday, November 04, 2011

Three years ago, I decided to cut way back on clothing purchases since I'm older and retired. I figured I could use my existing clothing stock for at least 10 years and would probably only need athletic socks. (After three years, I now would add underwear to the likely list of needed items before 10 years. :-)

For the past three years, I've been pretty good at not making "unnecessary" clothing purchases. So far, I've only purchased athletic socks and a couple sports shoes. However, some clothing is wearing out faster than I expected. In particular, wrinkle free khaki pants seem to only last a couple years before becoming "yard work" clothing. Otherwise, I haven't even purchased underwear.

However, last week, I was at a end of season golf apparel sale. I found a pair of golf shoes that were a perfect fit, which almost never happens for me. Then I found a shirt with my spouse's college emblem on it. The shoes were 25% off, the shirt was 66% off and I received an additional 10% off. So I was able to purchase everything for 20% less than the original cost of the shoes.

So I broke my boycott of buying unnecessary clothes since my current golf shoes should last a couple more years and I don't need another shirt, even with a college logo. I guess I shouldn't feel too bad. After all, I did hold back for three full years and actually, it feels good to have a new shirt in my wardrobe. However, I still have the receipt and can return the purchases if I'm overcome by buyer's remorse.

For more on Reaping the Rewards, check back every Friday for a new segment. This is not financial or wardrobe advice. Please consult a professional advisor.

Thursday, November 03, 2011

A childhood rite of passage was learning to ride a bike. I only remember a very small snippet of my experience. My mom was teaching me to ride in our backyard but pushing me from the house to the back fence. The yard was on a slight downhill slope. I would pedal downhill. My mom would steady me and help me stop.

I remember one time going downhill and getting close to the back fence. I yelled, "Stop!" My mom yelled from a distance, " Use your brakes!" I didn't remember if I did or if I crashed. Either way, it wasn't fatal because I'm still her.

This summer, I decided to teach our six year old daughter how to ride a bike without training wheels. Like my mom, I tried to have her ride on the slope in our yard. Although she didn't crash, it didn't work. Then I read a bike riding lesson on the Internet which recommended separating the two parts: balancing and pedaling.

So I took our daughter out on the street which had a slight slope. She worked on coasting and balancing without pedaling. That took about a week for her to master. Once she mastered balancing, the pedaling part was very easy. In fact, our daughter surprised herself (and everyone else) by pedaling uphill for a picture my spouse was taking.

It took about a week to learn riding a bike using the balance first then pedal method. I highly recommend using this method for teach a child to ride a bike.

For more on Crossing Generations, check back every Thursday for a new segment.

Wednesday, November 02, 2011

Three of the best four months for the stock market are November, December and January. Hence, there is a common belief in a Santa Claus rally and a January effect. In 2011, I don't think investors will see the historical Christmas rally with the upcoming Greek referendum. The uncertainty created by the referendum will increase volatility and likely eliminate the positive sentiment that leads to a Santa Claus rally.

Here are the two reasons that I think there will be no year end rally:

Misery loves company. The Greeks have maintained their standard of living by continually borrowing without the ability to repay the loans. Now that it's time to deal with the debt, the Greeks are reluctant to reduce their lifestyle. It seems that Greeks would rather everyone else pay for the lifestyle to which they have become accustomed. In essence, everyone should share the pain of their mistakes.

Not a bluff. The Greeks realize that any scenario will be bad for them. Why not negotiate to offload a greater portion of the pain in order to prevent a major financial meltdown for the entire world. The Greeks don't have much more to lose, and therefore not much more to risk.

For now, the EU debt crisis and the likely Greek default will continue to be damper on the stock market. I don't expect much upward potential until early next year when there is greater visibility of how the EU debt crisis and Greek default will be resolved.

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

Tuesday, November 01, 2011

According to Investopedia, "a sucker rally occurs with little fundamental information to back the movement in price." To me the definition seems to apply to the October 2011 rally, one of the best ever. I couldn't figure out what had changed from September 2011. The U.S. economy was still poor. The situation in Europe still looked bad. The catalysts for the rally were the beliefs that the Greek debt crisis would be resolved and the U.S. would not have a double dip recession.

Today, the Greek debt crisis is back. With a Greek default looming, a double dip recession in the U.S. has become a concern again. Unfortunately, nothing has changed and the stock market will likely fall back to previous levels.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

About Me

My wealth goal is to create a guaranteed yearly income stream equal to my highest salary for my retirement years. While I have developed a strategy to do this,
I am interested how others are thinking of achieving financial security for retirement.
This blog is a summary of facts, ideas, discussions, and action plans to achieve that goal.

Disclaimer

This is a personal blog about my thoughts, experiences and ideas on building wealth. The contents of this blog are for informational purposes only. No content should be construed as financial advice. Commenters, advertisers and linked sites are entirely responsible for their own content and do not represent the views of My Wealth Builder. All financial decisions involve risks and results are not guaranteed. Always do your own research, due diligence and consult your own professional advisor before making any decision. My Wealth Builder assumes no liability with regard to financial results based on use of information from this blog.

If this blog contains any errors, misrepresentations, or omissions, please contact me or leave a comment to have the content corrected.

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Disclaimer:
This is a personal blog about my thoughts, experiences and ideas on building wealth. The contents of this blog are for informational purposes only. No content should be construed as financial advice. Commenters, advertisers and linked sites are entirely responsible for their own content and do not represent the views of My Wealth Builder. All financial decisions involve risks and results are not guaranteed. Always do your own research, due diligence and consult your own professional advisor before making any decision. My Wealth Builder assumes no liability with regard to financial results
based on use of information from this blog.

If this blog contains any errors, misrepresentations, or omissions, please contact me or leave a comment to have the content corrected.